MetLife Platform Extends Advice to the Mass Affluent

To improve retention and attract younger customers, MetLife Inc. has introduced an online platform to offer financial advice to investors who make a minimum investment of $10,000.

Rebecca Kovatch, a vice president in the New York company's broker/dealer group, said it formerly gave financial advice only to wealthy customers. But the company wanted a way to retain customers whose account balances dwindled during the recession, she said.

Kovatch said she thinks there's a chance to use the service to generate assets from "emerging investors" that MetLife can retain as they accumulate wealth.

The recession has changed customer needs and industry priorities, analysts say, and companies are doing anything they can to advise smaller customers.

"There are a lot of investors out there that we are missing out on because of lower account balances," Kovatch said. "These are people that are starting up in their careers, and they don't have a significant portfolio of assets yet."

The investment advisory platform, MetLife Fund Management Services, was launched last week. It is available to all registered investment advisers in MetLife's broker/dealer group, including those at MetLife Securities, New England Securities, Tower Square Securities and Walnut Street Securities.

MetLife wants to develop a "smart product" that will let it offer advisory solutions to more customers without putting "undue strain" on advisers, Kovatch said.

MetLife took as partners Pershing LLC, a unit of Bank of New York Mellon Corp., to provide clearing services for the platform and PNC Financial Services Group Inc. in Pittsburgh for investment products and services.

"We wanted to make sure that, even though this was an online platform, we had strong partners who were monitoring the investments daily and customers' risk measures," Kovatch said. "Professional money management is critical, but we still wanted to have simplified account maintenance and support so advisers could make the best use of their time."

Kovatch said the platform will let MetLife's advisers "continue a dialogue" by supplying advisory services to smaller clients. To generate revenue, it is crucial for advisers to develop "an advisory rather than transactional relationship" with clients, she said.

"We are always telling advisers to segment their books and work with their larger clients, but we don't want these smaller investors to get ignored," she said. "By using this online platform, we are not costing our producers a lot of time out of the field. We want to help them maximize productivity while still maintaining the customers."

Many financial services companies are using third-party providers for such services because the cost can be hefty to create a proprietary advice platform aimed at mass-affluent customers.

Kovatch said that for MetLife, offering an in-house product, "can provide daily advice and charge a fee for that." The platform can recommend MetLife's annuities or third-party products.

"This is an opportunity to engage clients earlier and then, as the relationship matures, … cross-sell other solutions, like long-term care, retirement products and life insurance," she said. "Getting in earlier with these customers is critical."

Kovatch said it is too early to say how much revenue MetLife can hope to generate on the platform. She hopes to have targets within a quarter or so.